HI 00820.135 PEPPER Processing of Terminations and Reversals of Terminations

The PEPPER program processes terminations and reversals of terminations of SMI and premium-HI coverage for nonpayment of premiums. This program will produce forms and informationals for processed and unprocessed (excepted) actions, both of which require review. Obviously, incumbents performing any such review will need to be aware of the BCM maintenance routines and familiar with BCM output, all of which is discussed in SM 00711.000.

Termination actions are not processed until the end of the month so that any timely remitted premium payments which were delayed in processing can be applied to the BCM and the termination averted. For example, if the last month of coverage is March, the termination action would take place in April. A timely remittance that was not processed until some time in April would block the termination action.

A timely remittance processed after the termination action has taken place will reverse the termination. In this situation, SOBER will produce an informational form for insured and uninsured claims containing the legend “SMI TERM REVERSED-LIFE”. For insured and special age-72 payment claims, the PEPPER program will produce a HCFA-1585 containing the remarks “SMI TERMINATION REVERSAL,” “NO LETTER NECESSARY,” and “PRONG FILE LEFT SIDE.” Send a General “Check Box” notice (see NL 00703.629) with the 3rd block checked in each reversal situation.

Experience has shown an unacceptable percentage of errors in cases where an automated termination of SMI coverage for nonpayment of premiums has been processed on insured and special age 72 claims. These involuntary terminations on premium-HI claims involve a large money amount which can be expected to result in prompt inquiries if the termination is in error. To facilitate the correction of erroneous records and prevent the release of incorrect termination letters, all such terminations must be reviewed.

To facilitate this review, the CMS program which produces the Forms HCFA-1589 /1589A (Notice/Record of Termination of Medical Insurance Benefits), and HCFA-2654/2654A (Notice/Record of Hospital and Medical Insurance Termination) will produce BCM printouts for each insured and special age 72 SMI involuntary termination and all premium-HI involuntary terminations. The Records Analysis Clerk will associate the termination forms and BCM printouts with the claims folders and forward them to the Exception and Inquiries Examiner for review.

A. Review of Processed Actions

  1. 1. 

    Forms HCFA-1589A, and 2654A represent completed actions and must always be filed in the claims folders. Each form, the BCM printout, and the appropriate folder must be examined for any information that would support or negate the determination. If this examination indicates the action is totally correct, file the folder document (left side), release the form letter, and return the folder to files.

  2. 2. 

    Whenever information is detected that makes the action either fully or partially improper (i.e., the termination is proper, but the PDA is incorrect), destroy the form letter, file the folder document and take the appropriate
    action via MADCAP, MISCOR CIP R or “REVTER” to correct the record and notify the claimant (if necessary) of your action. The following examples illustrate some of the most common reasons for an erroneous termination:

    1. a. 

      an indication is in the file that a payment was made timely, but was not processed in the system soon enough to block the termination; or

    2. b. 

      the file shows the claimant should have been under a civil service, State, or private third party arrangement, but was still carried on the BCM as a direct billing case; or

    3. c. 

      a timely remittance made for both beneficiaries in a PIC “O” payment was credited to only one beneficiary; or

    4. d. 

      an annual report or work notice, submitted prior to May, would have permitted payment of sufficient funds for April or earlier from which the prior year premium arrearage could have been deducted; or

    5. e. 

      a clerical error in summarization or premium adjustment created an erroneous arrearage; or

    6. f. 

      a transcript exception was not resolved; or

    7. g. 

      a manual debit which would have prevented the termination was being, or should have been, processed at or before the time the record was selected for termination; or

    8. h. 

      premiums credited on a cross-referenced or dual-entitlement record were not brought forward to the current record; or

    9. i. 

      a previous withdrawal, termination, or refusal was not effective; or

    10. j. 

      the claimant filed prior to the HI/SMI
      termination date.

      NOTE: An uninsured claimant who filed for special age 72 payments before the selection for termination was made but whose award for payment was not approved by the time the termination was processed would not be entitled to have the termination reversed. However, if free-HI entitlement on the special age 72 award precedes the termination date of premium-HI, the HI entitlement will continue and any adjusted premium arrearage will be withheld from the special age 72 payments.

  3. 3. 

    Any claim in which the termination is questionable must be developed and controlled by use of the Form SSA-5015-U2. The form letter should be destroyed as a new letter is required whether the termination is subsequently determined to be valid or erroneous. Some examples of questionable situations are as follows:

    1. a. 

      an allegation of third party liability not>END-LINE>resolved; or

    2. b. 

      a billing notice was returned for address reasons and no development was undertaken; or

    3. c. 

      an allegation of an uncredited payment of a bill was received but there is no indication of a final determination or development. Prompt handling of these records is necessary to permit the release of the correct form letters in time to allow reasonably swift processing of reconsideration requests and to avoid unnecessary queries regarding utilization, billing, etc. It is intended that this review be completed within 2 weeks of the printing of the termination review forms. If a record cannot be reviewed by the 15th day of the month printed on the form letter, this date should be changed to the first day of the month following the month the review was completed. For example, the coverage terminates May 1, the form letter is dated June 1 but the review is not completed until June 16. The June 1 date on both the folder document and form letter should be changed to July 1.

  4. 4. 

    An explanation of the specific items appearing on the Forms HCFA-1589A and 2654 follows:

    1. a. 


      The name and address of the beneficiary whose SMI entitlement is being terminated will be shown.

    2. b. 


      The date will be shown as of the first day of the second month after entitlement has terminated; e.g., if the first month of noncoverage is May, 1976, the date shown will be June 1, 1976.

    3. c. 

      Claim No.

      The beneficiary’s claim number will be shown.

    4. d. 

      Folder Location Indicator

      The folder location indicator will be displayed on the folder documentation only.

    5. e. 

      Last Day of Medical Insurance Coverage (HCFA-1589A only)

      The last day of coverage will be shown as month, day, and year. This block will be titled Last Day of Hospital and Medical Insurance Coverage on the HCFA-2654A.

    6. f. 

      Past Due Premiums Owed

      The amount of premiums owed prior to the
      termination will be shown.

    7. g. 

      Run No.

      The computer run date will be shown. The date will be composed of a o six-digit number (MMD-DYY).

    8. h. 

      UPD Mo.

      This is the month and year the termination was recorded on the MBR.

    9. i. 

      Old ABN

      The last debit action number on the MBR will be shown here.

    10. j. 

      New ABN

      This will be the computer run which revised the MBP.

    11. k. 


      The BIC of the beneficiary whose entitlement is being terminated will be shown.

    12. l. 

      MBA (HCFA-1589A and 2654A only)

      The monthly benefit amount of the beneficiary will be entered.

    13. m. 

      MBP (HCFA-1589A and 2654A only)

      The monthly benefit payment now payable will be shown.

    NOTE: Since the HCFA-1589A and 2654A represent completed credit/debit actions, any subsequent actions taken will need to have the information shown on these forms taken into consideration.

B. Exception Processing

The PEPPER program will produce 5 ×8 informationals when the information on the BCM or MBR is such that an automated termination is not possible. There are currently nine reasons for this exception to occur. These exceptions will contain the acronym “STAR” at the end of line 5 of the 5 × 8 informational form.

1.1 (or 2) Intervening Action

An action is pending in the PESO system that may alter the decision to terminate the coverage.


The BIC being terminated is not on record. If there is an equivalent BIC on the MBR (e.g., a BIC of A on the MBR and T on the BCM) it will be shown.

3.5 Unacceptable LAF

The LAF recorded on the MBR will be displayed.

4.6 Invalid HOC

Premium-HI is present but is not being terminated when the SMI is terminated. If a Part A termination is involved, the HOC must be “Y.” Where a Part A reversal is involved, the HOC must be “T.”

5.7 SOC Not Y or G-Termination

The SOC on the MBR is other than a “G,” “Y,” or “T.” If an SMI termination is involved, the SOC must be either a “Y” or a “G.” Where an SMI reversal is involved the SOC must be a “T.”

6.8 MBR-Third Party, 09 MBR-Withdrawn, 10 MBR-Railroad, 11 CAN NIF

The exception informationals will be associated with their respective BCM printouts and claims folders by the Records Analysis Clerk and given to the Exception and Inquiries Examiner for a determination as to which record is correct, whether the termination action would or would not have been proper, and what action is required to correct the erroneous record (BCM or MBR).

The corrective action must be taken and may involve
MADCAP, MISCOR CIP R, SIC cards or SSA-1592TC actions. If it is determined that the termination is in order, process a manual termination and send a notice patterned after the HCFA-1589 (see NL 00722.027) or HCFA-2654 (see NL 00722.031). The date of this letter should be the first day of the month the manual termination is processed.

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HI 00820.135 - PEPPER Processing of Terminations and Reversals of Terminations - 11/21/2001
Batch run: 03/29/2017